A resistant DOJ has put AT&T's bid to continue its reconsolidation in jeopardy. The purchase of T-Mobile would have given AT&T a monopoly on GSM 3G and made it the nation's largest carrier, overall.

T-Mobile has hired George Cary (left) an antitrust lawyer who has already beat the Department of Justice in one lawsuit. (Source: Legal Times)

Meanwhile AT&T and T-Mobile arm their legal arsenal should the decision go to court

"AT&T
is the T-1000 of corporations - no matter how many pieces you break it into, it
always comes back together." -- Stephen Colbert on the 2007 rebranding of
Cingular as AT&T, Inc. (T)

AT&T's
purchase of Deutsche Telekom AG's (ETR:DTE) T-Mobile USA would
have granted it an almost complete monopoly on GSM phones in the U.S., where 3G
technologies like GSM still dominate the majority of customer plans.
Furthermore, the deal would have made AT&T the
nation's largest carrier -- with Verizon Communications, Inc.
(VZ) the pair would own 80
percent of U.S. cell phone contracts.

AT&T is reportedly engaging in a round of last minute negotiations with the
U.S. Department of Justice to try to cut a deal to save the acquisition.
Wayne State University law professor Stephen Calkins says such a
deal could be attractive to the DOJ, stating in a Reutersinterview, "It is always scary
to go off to litigation. I suppose there's a chance that the government could
get cold feet."

The company expressed willingness to divest up to 10 percent of T-Mobile's
airwaves and customers in order to escape the perception it was building a
monopoly. A source close to the deal told Reuters,
"AT&T is pretty determined that they can find a solution, and they are
pretty confident."

II. DOJ Doesn't See Eye-to-Eye with AT&T

But the DOJ apparently wants the company to divest at least 25 percent of
T-Mobile -- something AT&T doesn't want to do. Bob Doyle, a former antitrust
enforcer now in private practice, says finding an appropriate buyer would be a
daunting difficulty even if AT&T consented to the provision. He
states, "Verizon's a no go. Sprint [Nextel Corp. (S)] may be a no go also."

As the DOJ filed its 22-page lawsuit Wednesday, sources close to AT&T say
the company is growing frustrated. They remark, "That was part of
the frustration in that AT&T expected that they would have had much more
meaningful discussions and figure out where everyone was, and whether they
could close the gap."

Another source said that while AT&T wants to work out a deal, the
discrepancy in the divestiture figures is slowing negotiations. They
state, "I don't know if and when a new meeting is scheduled, given
yesterday's news."

III. AT&T Arms Itself for a Legal War

AT&T does have some things working in its favor.

While the DOJ did successfully block an attempt by Verizon
Communications, Inc. (VZ) subsidiary MCI, Inc. to
purchase Sprint Nextel Corp. (S) (at the time Sprint) in the 1999 Clinton-era
and EchoStar Communications Corp's (SATS) deal to buy Hughes Electronic Corp's DirecTV
in the 2001 Bush-era, it has lost other antitrust fights.

Under the Bush administration, Oracle Corp. (ORCL) beat the U.S. DOJ in court in 2004 to acquire
Peoplesoft, Inc. And also under the Bush administration's watch the DOJ
floundered in a bid to stop SunGard Data System Inc. from buying Comdisco
Inc.

T-Mobile and AT&T also have some high-profile legal talent at their
disposal. At AT&T's side is Richard Rosen of Arnold & Porter
LLP, a former communications sector head of the DOJ's antitrust division.
Mr. Rosen oversaw Cingular's purchase of AT&T Wireless and later
purchases of Dobson Communications, Centennial Communications, and
wireless properties divested by Verizon and Alltel.

In T-Mobile's corner is George Cary of Cleary Gottlieb Steen &
Hamilton LLP, who successfully defeated the DOJ in allowing Staples, Inc. (SPLS) and Office Depot, Inc. (ODP) to merge. States
one antitrust veteran, "He's one of the best. He's exceptional. George
Cary is the Lou Gehrig of antitrust."

Also working in AT&T's favor is U.S. District Judge Ellen Segal
Huvelle, the presiding judge in the case, has a reputation for speedy rulings.
The trial could occur within two months, according to sources. And
while Judge Huvelle has previously admonished the pair for providing lacking
information to support their claims, they will soon get enough chance to try to
improve their fortunes.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA